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RealTime Economic Issues Watch

In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.

Recent Posts

How Long Will the Global Oil Glut Last?

by | January 22nd, 2015 | 10:14 am

The decline in oil prices to less than $50 per barrel should not be a surprise. The surprise is how long oil prices stayed above $100 per barrel when supply and demand fundamentals could no longer support such a price. Given the supply outlook, oil prices will likely remain below $50 per barrel for some […]

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Bulgaria: Slayer of Russian Energy Projects

by | January 21st, 2015 | 01:59 pm

In the past three years, Bulgaria has been slaying large Russian energy projects at the pace of one a year. In 2012, it was the Belene nuclear power plant—started in the distant 1988 and dragging along until the Borisov government, in which I was minister of finance and deputy prime minister, killed it off. In […]

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The ECB’s Coming New Stance on QE

by | January 20th, 2015 | 01:51 pm

For months I have argued that the European Central Bank (ECB) is not likely to move quickly toward new monetary stimulus, including the purchase of sovereign bonds. I have now shifted my expectations. I believe that at its next meeting, the ECB will likely commence a broad based asset purchase program, including euro area sovereign […]

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2015 Outlook for FDI in the US: Two Key Sources of Growth Are China and Japan

by and Lindsay Oldenski | January 20th, 2015 | 09:04 am

FDI by Chinese firms in the United States Chinese investment in the United States has been growing in recent years, concentrated in manufacturing, electrical equipment, information technology (IT), chemicals, and extractive industries. But total foreign direct investment (FDI) by Chinese firms in the United States is still much lower than what would be expected based […]

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The Effects of a Wage Increase by Large Corporations on the Macroeconomy

by | January 17th, 2015 | 12:00 pm

The Peterson Institute for International Economics has for some years undertaken research on inequality and inclusive capitalism, partially supported by a series of grants from the ERANDA Foundation. Last month, Aetna informed the Institute of its plan to raise the wages of its lower-paid workers. Following Aetna’s announcement of its intention, the Institute is posting […]

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Two Cheers for the Swiss National Bank

by | January 16th, 2015 | 12:45 pm

The financial world is hyperventilating over the Swiss National Bank’s surprise announcement that it is abandoning its policy of pegging the Swiss franc to the depreciating euro. Two cheers for Thomas Jordan and the Swiss National Bank (SNB).  It was the right policy move and it reminded financial markets that the job of central banks […]

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How Raising Wages of Low-Paid Workers at Large Corporations Would Affect Income Inequality

by | January 15th, 2015 | 10:30 am

Any measure that increases the pay of low-wage workers would, by definition, produce a positive effect on the distribution of employee earnings, reducing inequality. This analysis focuses on new wage floors that would be implemented by the employers of a small minority of private sector workers, specifically large private sector firms operating in industries that are not highly intensive in low-skilled labor.

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Raising the US Wage Floor: The International Perspective

by and Tyler Moran | January 14th, 2015 | 10:30 am

Income inequality in the United States has increased in recent decades to levels exceeding those in comparable large advanced economies—and even more so in traditionally more equal smaller European economies. Moreover, many studies have found that among advanced economies, paying higher wages to low-wage workers reduces inequality and increases economic growth.

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Higher Wages for Low-Income Workers Lead to Higher Productivity

by and Jan Zilinsky | January 13th, 2015 | 09:41 am

Under what circumstances can raising the pay of low-skilled workers at large corporations lead to general improvements in productivity? Last month, Aetna informed the Institute of its plan to raise wages of its lower-paid workers. With this natural experiment in mind, Justin Wolfers and Jan Zilinsky decided to explore literature and theory on how pay […]

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Effect of Large Corporations Raising Wages of Low-Paid Workers

by | January 13th, 2015 | 09:38 am

If all large private sector corporations in the United States outside of sectors that intensively use low-skilled labor increased wages of their low-paid workers to $16 per hour, the pay of 6.2 percent of the 110 million private-sector workers in the United States would increase, on average by 38.6 percent.

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